Trade Imbalance

Uganda's Economic Overview

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Uganda's economic recovery in the last fifteen years has been remarkable. Regarded, as a star performer, Uganda is a pioneer of macro-economic stabilization and structural adjustment in Africa. In 1986, the Government of President Yoweri Museveni inherited a country in shambles, mismanaged by dictatorial and murderous regimes. The economic and social indicators painted an abysmal picture.

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Against this background, the country's economic performance over the last decade has been impressive. The average real rate of annual growth in GDP has been about 6.9% resulting in an annual increase of 3.7% in real GDP per capita. Inflation has fallen from 24.6% in FY1991 to -0.2% in FY1999. The Government reform program has succeeded in imposing fiscal discipline, restructuring public expenditure, opening the economy and anchoring its reliance on market forces.

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The country's debt overhang has been reduced under the Heavily Indebted Poor Countries (HPIC) initiative. Uganda was the first country to access the original HIPC initiative, in April 1998, and the enhanced HIPC Initiative in May 2000. Poverty, as measured the headcount index in the household Surveys, declined by more that 20% between 1992 and 1997 an achievement aided by high economic growth.

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The reduction of poverty is the first priority on the country's development agenda. The Government has invested heavily in Social Services, and human development. Key education and health indicators have improved in the past decade. The main challenge in the education sector is quality. In health, the major issues are adult mortality, life expectancy and limited availability, and the aids epidemic. However Uganda is one of the first Countries in Africa where the incidence of HIV/AIDS is declining as a result of the Country's aggressive response to epidemic.

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Uganda was also the first Country to present a full Poverty Reduction Strategy paper (PRSP) to the boards to the Bank and IMF in May 2000.

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PRIVATE SECTOR DEVELOPMENT FOR ECONOMIC GROWTH

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To ensure Continued high economic growth and decrease vulnerability to exogenous shocks, an economic transformation is needed in Uganda. Specifically, as emphasized in the PRSP, agriculture must be modernized and non-farm private sector activities encouraged. Uganda has lowered tariff and non-tariff barriers to regional trade and removed all restrictions on international Capital transactions. The Government is pursuing a
\r\n comprehensive privatization program and has already successfully liberalized the marketing of Uganda's coffee. In the past decade about two-thirds of Uganda's public enterprises have been privatized. A recent success was the privatization of telecommunication utility in the Spring of 2000 and an accompanying sector reform.. Those changes attracted a second national operator and a second cellular licensee, resulting in expanded service operations and lower prices. Reforms of the power utility, airline, railways, water, and other public enterprises are ongoing. Overall, private investment as a share of GDP increased from 7.8 percent in FY 1991 to 11.7 percent in FY1999.

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STRATEGY FOR ECONOMIC TRANSFORMATION

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The Government's Strategy for economic transformation is spelled out in its Poverty Eradication Action Plan (PEAP), a medium - term development plan that guides government policy and provi